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DRQ Dril-Quip

Participants
Blake DeBerry President and Chief Executive Officer
Jeff Bird Chief Financial Officer
James West Evercore ISI
Thomas Curran B. Riley FBR
Marc Bianchi Cowen
David Smith Heikkinen Advisors
George O'Leary Tudor, Pickering
Martin Malloy Johnson Rice
Simon Wong Gabelli & Company
Call transcript
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Operator

Ladies and gentlemen, thank you for standing by. Welcome to Dril-Quip’s Conference Call. [Operator Instructions] An updated investor deck was posted under the investors tab on the company’s website yesterday along with the earnings release and will be referenced during today’s call. This conference is being recorded and a replay will be made available on the company’s website following the call.

Before we begin, I would like to remind you that Dril-Quip’s comments may include forward-looking statements and discuss non-GAAP financial measures. forward-looking that to of anticipated differ expectations in noted Dril-Quip’s could results be expressed results actual materially these should a factors variety cause or It statements. from the quarter Please refer we yesterday of disclosure for financial reconciliations operational forward-looking and measures. results released statements XXXX on non-GAAP to announcement and fourth the I would President, the Chief Officer. Executive turn and to over now conference like to Dril-Quip’s Blake DeBerry,

Blake DeBerry

industry don’t high-level team, we’ll today. call. I our like well host with you Thank on decided our to to quarterly year would of review to of discuss in comments employees remained our the a the you. key across of the annually operated cash generated the at minimize give we our will Jeff and million, proud positive call that we Bird, closing time have accomplishments then free of our XXXX intend On marked and flow then call $X.X I of focused conference call for behalf which an with number how team of generated begin worldwide faced our operations one efforts the welcome made and providing be XXXX, changes the our positive a quarter highlight guidance general and grew turn that began XXth I several service doing to detailed fourth We same of having over we the questions. environment management are time, management successfully the that today’s time Officer sense XXXX. then We as downturn consecutive have highest to review We customers the to to over them on going cash results free of will that Chief to particularly despite cash all open our some calls But last all this flow. difficult In some flow we’re entire at regarding of able ever-changing Financial as I outlook free underway level financial we at of like I’m at and you to years. will to XXXX. cost forward. doing discuss provide XXXX our with business. in and review results the and last support the a Dril-Quip. quarter

and with realized We staying high Front than and of better into the Engineering Exploration the relation Street Agreement flow Falkland end the subsea focused have industry development to before importance of quarter production range. offshore Oil fourth in like In cash we entered operating End a the contract in free Wall the October Frame Production above for a and Lion Premier Islands. Phase and located the XXXX, Sea our X importance of their guidance Design generating industry on of in systems $XX.X limited saw been million, services. well free also critical long and debt revenue The oil expected cyclical

also We four quarter non-project experienced in strongest bookings years. our

orders year-end at Subsea Our million million, The backlog came in XXXX. an XXXX backlog grew and the primarily from of increase year-end $XXX Wellhead $XX growth two-year Africa. Europe to from and from

to completed of to of share past and activity, fully XXXX. XXXX, budgets endeavour cautiously not in program. quote activity our remaining repurchase million optimistic see will that as ready our XXXX, say don’t we are we are continued we purchases the our stock by Nonetheless, fourth we we $XXX well remain the also under the In backlog in we trend common drilling year we are increase quarter as upward customers utilize this seeing that international quite yet. trough to was a While believe underspend

this As accumulated return authorized million yesterday, and we and in share our $XXX our key to very supporting use as to cash significant we repurchases has stockholders. We needed for now tuck-in strong balance us for well we funding investing believe we program to on XXXX, additional a a complementary our have sheet buybacks. that acquisitions. an way use at powder to possible available the as new announced have cash million With in $XXX future cash have year-end is projects, a dry upturn that for board good of pursuing

we that year minimizing indicators and of margins. we on we a focused offshore maximizing early hopeful are last saw cost remain While possible some recovery,

announced, centered as began previously changes implementation during performance business we The our anticipated XXXX. beyond the as and organization. we entire long-term are full the a structured soft of forecasted systemic market approach are benefit we company across to improve cost in As and well making will transformation our and during current both XXXX, a around recovery efficiencies

more leveraging create across will will customers. for focused in and sustainable supply chain, are model, supply and infrastructure optimizing initiatives footprint developed We our which integrating engineering, improving our The SG&A, chain while maintain R&D. key we flexibility on cost-saving manufacturing, our markets global and

to am plan. annualized of We to savings. able of to head pleased XXXX worldwide us annualized $XX provided savings year-end total immediate our our X/X to $XX some target. million $XX year track cost approximately that to ultimate are expenses capture of improve Having report last to projects are savings way This initiatives and million realized ahead quick-hit savings efficiencies. of We reduce annual from total our we by about million. on achieve I were

realignment footprint rationalization additional be expected and our are savings. of XXXX, additional add should second on half the to accumulative of and Over and to of all focusing million In annualized the be these we first about able of believe savings. up we’ll that half additional we’ll of focused will on savings million noted of ramp be by $XX cash around recurring. It annualized savings $XX expect XXXX, organizational be

of have million by end cash to expect we of savings nearly annualized in such, $XX As XXXX. the

integrating beyond, procurement and projects on XXXX more expect and realignment focus sustainable to supply generate look will to savings. and chain even we we As

long-term hard, continue see, As on and can financials review turn have cost-cutting our call to efficiently the details to I’ll initiatives. and you With strategy operating our Jeff flow. generate we been more to provide cash on to that, the over free executing working

Jeff Bird

Good Blake. morning, you, Thank everyone.

financial to $XX.X in for guidance due end results $XX by our the the fourth Our to increased high fourth quarter significant This some for increased million, showed the to product Revenue exceeded of primarily Asia of million range million $XX Pacific. quarter quarter-over-quarter sales improvements. $X million.

about fourth growth the we $XXX.X encouraged are that On in will it and by in fourth for revenue prior by we activity. driven by we’re the saw increased decrease had quarter from $X of activity XXXX Hemisphere and For we levels quarter primarily Western cautiously million in carry while decreased or full project activity Subsea by quarter X%, million revenues Brazil, activity XXXX, the in low a year our a basis, and North were XXXX, our XXXX. by offset of pipe primarily segment versus the optimistic higher driven controls into XX%, America, Wellhead

Norway. due the quarter increased and in activity to Wellhead revenue the by fourth compared Hemisphere Eastern million, Ghana or increased pipe to Subsea and quarter in $X.X prior X% Our

Asia Indonesia and Subsea in offset Pacific sales due to increased Wellhead $X connector or aftermarket increased Malaysia, Qatar by revenue million sequentially activity. and XX% by lower

to $XXX revenue currently $XX to major see have subject to compared an an for prior which the start to increase we all million in with of if the in to the have any and Cost was $XX.X wins or activity. XXXX of uptick are the line quarters we $X XXXX, to in million, forecasting project in revenue. sales fourth of increase range million ahead quarter quarter steady is million, change Looking in

$XX.X XX% operating reduction to for year year compared year For million, XXXX, or XXXX. margin full was of $XXX.X fourth million of the the XXXX and was sales Gross cost XX%. quarter full full a of

of $X levels down in anywhere cost strategic optimization, of $X While moving cost initiatives we XX%, us annually. including help our to several boost to on this operate of footprint, our focused operations, was from looking are believe forward. for realignment forge supplier margins cost million that which XXXX options should These million XXXX slightly initiatives for from

In area expenses. square of overall in some was addition able experience initiatives to realignment the our reduction of to An savings were facility result SG&A in we footprint will cost this, footage. where quick-hit approximately XX%

For primarily due was quarter, to quarter, $XX execution to SG&A $X.X million fourth million, third phase the the compared a of first reduction project. of of transformation Dril-Quip’s

considering SG&A had additional like organization For expenses $XXX in XXXX, in XXXX, by planned I of the XX% up executed full to and our year portion salary will future note regions. needs. to that for XX% million reductions we our line the pay In We increases. expenses since or most and our XXXX. million also return competitive to downturn, freezes, with will the rationalize $XXX.X business, reduction XXXX $XX.X addition, salary in salary anticipated a nature of would from to in bring to we the institute initiatives modest decreased million approximately a

win of We’ve XX million labor annualized and $XXX,XXX the our savings, As fourth supplier $X will generated adjusted quarter. $XX over that include Blake in EBITDA. renegotiations. to second XXXX from annualized with in we to million quick impacts in the quarter expand immediate all discussed, ability see million third initiatives of $XX increasing reductions initiatives us XXXX implemented which began of the adjusted are help in the costs generate million half cost We implementing $X to EBITDA our in

cost as addition, million in multiple EBITDA of will in transformation We total into we In reduction approximately a move have believe in further headcount $XX about XXXX, likely which we we XX%. will see should that realized initiatives, savings XXXX, adjusted generation.

at million. annualize XX, savings out When see makes expect nearly posted by you’ll look Slide XXXX, the we we look to the of it QX goal at our presentation approximately impacts. yearly achieve quarter, you and of expected website, by have break If $XX which to you if $XX you quarterly million, workstream the we on

hampering to Our cost methodology without the implement that goal lowest maximizes deliverability. margins is

on As we and chain by there projects. procurement additional look supply are to primarily savings, we focusing integrated and XXXX believe potential beyond,

maximize operations, strategic our of strategic all we where our We’re are alternatives. our aspects looking the assets. at considering of alternatives which value forge businesses, includes all This include to

the at we diluted income for share. net fourth or $X.XX $XX.X Looking million per loss loss of of XXXX, a reported quarter net

updated On $XX.X result breakout a During of assessment our the inventory quarter, charges and as goodwill XX, million of of region. market non-cash a of show current Slide by we recorded impairment these conditions. we asset, charges long-lived

were for after and that our the totaled or charges for fourth was charges $XX.X severance We also quarter primarily reported Adjusted initiatives. $X.XX $X.X $X.X million cash comprise per million diluted share totaling with million loss items loss per share. that adjusting or other costs implementation net the associated savings expenses of and restructuring cost $X.XX

about totaled estimated CapEx on As the annual million $XX million. XX, $XX.X $X.X fourth quarter million Slide of our maintenance million. shown between the $XX our was run to We year and in normal for XXXX, and full CapEx

be CapEx For the XXXX, of towards end we range. high the that maintenance to expect

the see fourth beginning that part freeing to were quarter we an On hand, more $X.X in was other of activity, we XXXX rationalization to footprint could to in sale cash a than generated in up from the CapEx meet for of If flow cash the third of Free XXXX. million has our increase quarter experience surge demand. our facilities we plan. of as doubled are which the the see $XXXX,XXX

to past year-end, on cash on this the priority million row $XXX the generating year. six positive $XX.X to generating ours for and long-term, and million cash a done continue flow again positive to cash complementary and which acquisitions. investing noted, free available in which ABL expect liquidity. on we have million Blake At free focused we $XXX.X resulting facility had on and cash a We of in years key our committed cash, remain hand remain over for of As shareholders pursuing we are is available

Blake. about said, the positioning we call the believe future. be into and back well With future to I excited will to We’re Dril-Quip are the that successful turn

Blake DeBerry

Thanks, Jeff.

continue to focus to plan beyond, bottoms-up will look we our vision strategic XXXX towards a the we with on long-term. As and

believe and us sustain and environment. lines throughout to entire product only and to we operate efficiently reorganizing more but allow are us business realigning macro forecast company not overall recovery that our reevaluated have the in We our any

everything maximizing own products manufacture get every our but to solution we’ll while find the longer lowest instead, no customers will ensure We location our quality in margins. cost

around reducing We’re footprints physical the our G&A world. and our rightsizing

We Vice President to us sustainable of capture Chain improvements. Supply have new a hired help long-term

for opportunities strategic returns. all evaluating maximize are We to forge operations our

We and on innovative on will our technological, cost leverage continue initiatives keenly and R&D to We implementing products. focus focused maximizing our margins. savings remain

an strong to market. clean improving capitalize service an and a have on balance organization, We sheet experienced poised first-class

We will to I continue for to over open shareholders. value With cash meaningfully call profitable will turn operator the to to should growth, focus our on flow and the that, delivering free line add generating questions. the which

Operator

from West the of Instructions] [Operator question Your ISI. James line comes first with Evercore

James West

Blake, seems next program, the which of is bottom least behind laid an thematic, a to the to on big is, at origin revisit Because so. quarter. of offshore Jeff, Dril-Quip transformation be outside So you – or started transformation but this around the program? love hear, I Dril-Quip is coming first thinking can seems over What those, the the and be metrics how very congratulations guess, of, great got I progressing? the You and of change of, to the for year this of, maybe all, question organization. this thematic biggest a main and out, would my how for And is and the market of see kind the then, it the the kind kind back as here this – that we

Blake DeBerry

The today’s we’re of and a But All steep And take were our sector was of the right. you did we an we XXXX, not what to makes look and much look that, anticipating. at Thanks, recovery alignment brought strategy party the just recovery outcome extended put that we Subsea offshore that that were from of by one share independent we we review. longer Wellheads example, an given James. that second just that the had the and previously market announced to bottoms of a capacity strategic outputs right all we your much of are verify out big on Yes, our could doing. XXXX, itself. with connectors going in in pretty it more capacity track. was we that up perspective in for And to was a in as quarter strategy in in wells facility supply be the of in environment. so with offshore Houston outside the things drilled of If being of outlook and XXX% in the

we the structurally how’s company us drove our And really took – no look that first So was up. to at do harm methodology to set was customers. the

then products, with available and operate stay the doesn’t the how products same. had was change they So And how that’s we’re us, our move change of what’s customers the for concentrate a How interact to of but make different our with to company our supply certain chain to part going we interface change. big regional bigger supply those procurement also in centers. methodology. manufacturing And

of major simply elected at was manufacturing because that to we every We So structure in where facilities. is center facility facilities not had created a we different our close manufacturing any customers. our place excellent for activity

of see. challenge sales, aftermarket are each facing, inside and that to in left The then some customers the that to we our assembly want the customer things that move. and So logistically location products, our are sales the things things the those

capacity. fabricated then don’t practical in some example, centralized in of need in to to set of logistics facility at – the fabrication does those location. looked was each big number up We machines at one level do make going the we manufacturing, to be location. footprint flex how for the it moving And So each be with joint

and at is the current headcount work at what is, expectations. not the but current our it’s that So to manning the our it support capacity level, current revenue personnel manufacture

And very project, forward in out looked turned of real cost XXXX. getting We thousands was thousands So I’m the on. Dril-Quip’s how with September the that transformation employees. That’s initiatives of an that’s to It started it and pleased by at and we’re really completed hundreds looking savings this the immense driver. path timeframe. over

James West

strong great. Well, process That unique that. like something congratulations on to sounds very Dril-Quip. Okay, very, and a

you work One shareholder follow-up the running are employed. on rather a a margin, our on not think capital business unrelated that’s of guys – your company after willingness my I’m gone and you row returns of after saw this think about shares, I your about on alignment terms the, guys business, do always sure business already has how been week value returns guess, way in Dril-Quip what how little but but with could precisely you elaborate than how you think market to market pretty we so the about somewhat driving in about aligned you the you and go share. obviously if

Blake DeBerry

Sure.

quarters, very earlier, call for stated from the been flow cash I that’s XX been a that’s we’ve metric in very, As consecutive been to the beginning. important free us

I webinar. pricing focus leave there. how to shareholders. cash chase that And information we And on How to do program the yesterday. we me how our share. and that it initiated focused frankly, the – did did shareholders to contained incredible board on and We discipline. do the the our really your pass I returning so buyback board. they operating for take listen not is returns And But to our quite to quite cost market in margins, the are want to my And just Dril-Quip have business reducing through improving on frankly, we was stock make I’ll

James West

Blake. Thanks

Blake DeBerry

thank right All you.

Operator

FBR. Thomas question next B. comes from with Your Curran Riley

Thomas Curran

the your it. on wish I topic me years a Jerry earnings the Annually Brooks nagging were after to start. inaugural call on of it’s shut good finally him only call. hear up Congratulations on about

Blake DeBerry

listening. be don’t I might know. He

Thomas Curran

somewhere. Galveston. him. Yes, Good in on Probably beach the for

news a dialogue Hanoi and so, starting Or any flow on multiparty a place? there is Emperor. should negotiation? Repsol toward know between CRD, Beijing? if is decisive meaningful form for Where between currently we Red resolution? of perhaps taking the whether and Petrovietnam, So with And Do you most progress focus it

Blake DeBerry

dialogue end We expires award, of have valid year. do project. aware how that the March it not on is the I’m this a of layer Yes, of progressing

have going how just with see and we’ll that Repsol expire. wants whether to let or engage So that to forward us progresses

think in having projections is any revenue that for we’re one important I revenue XXXX, our really from of takeaways the not CRD. including that we’re

So business, project that shouldn’t forward. the outcome not affect should that go the for

Thomas Curran

and DXe the rate point? then at commercially When And front the on run this each Connector then And each Okay. achieved has revenue launched? for BigBore new product what design. latest the was

Blake DeBerry

they profile. So penetrating to about success had months can one. DXe got XX some machine We’ve DXe we companies and that in we’ve launched the profile licensed ago. the so so market, We’ve BigBore-IIe three

One of the work. HPHT as profile for as the their our all development BigBore-IIe major well customers of has adopted DXe

So that’s a sign. positive

here operator to from new their existing in We products. have one impact anticipating we’re really inventory XXXX come in will the U.S. an from going is XX% that our BigBore-IIe. convert bookings to of perspective, And about

Thomas Curran

color one bookings. helpful. That And Okay. me last on is for

Just what XQ was categorize the orders would percentage you that in of as non-project?

Blake DeBerry

all fourth non-project. bookings have any the project We were didn’t in quarter. They

Thomas Curran

a XXX%? was it So

Blake DeBerry

XXX%.

Thomas Curran

Okay for great questions. taking thanks my

Blake DeBerry

All right thanks Thomas.

Operator

Your comes Cowen. Bianchi Marc question line next of the from with

Marc Bianchi

comment last Just quarters? the been it up, booking any do to you differently few the than would you run following the about the this a in what as bookings see rate see run project non-project gentlemen, have prior orders? sustainable or Or Do rate?

Blake DeBerry

booking we’re rate in optimistic fourth about run certainly the Marc, that quarter.

guide, running probably throughout going normally been We rate call are you’re end top call I anything say not of currently would here But that at the to the ready booking about our year. I this that say, QX optimistic I’m optimistic like. like. run to still we’ve of range guide better quarter today. looks we are bookings first what was what if on looks

Jeff Bird

is I range. $XX of so what think high have talked consistently to million we that million $XX that But end about,

Marc Bianchi

activity? restocking it taking Right. just some increase that kind a for have of really And there of could gradual is really falling the is is – in that risk off? that’s place Or offshore driver

Blake DeBerry

No.

gradual a in just increase it’s activity. think the offshore I

didn’t in downturn their we post-drilling if Wellhead followed because the because of this things of event, One in customers XXXX, of the the we’re activity in seeing you down orders. that a us cancel drilling saw any XXXX, the commodity similar the where our very XXXX, price. moratorium slowed They moratorium is

in joints We our products our you And revenue. that the orders as portion so margin higher a a as And it’s of go margin effect, lower some of and as see just product – they’re a then two joints fabricated consist margin the drilling gross the we service. fabricated the what in seeing resale. Wellheads have gross just see our some of service large pipe work. percentage But because to we’re a is de-stocking also for they activity of back customers procure because so reduction markup placing

means just it lower me, customers. we’re by So being is customer our the restocking point margin. for is consumed. But this closer This encouraging. to is getting And of property

Marc Bianchi

Blake. thanks right, okay, Right, that for

being then that on the on you similar – so think we at the cost of sort rate on incremental one run you’ve delivered guidance like revenue should Just the top along you’re And what given to quarter? is more the about you in that profitability at clicking which the any the of quarter, of seems rate run delivered adding fourth revenue that? savings in fourth

Blake DeBerry

want that? to take you Jeff,

Jeff Bird

with right quarter number. million that’s the Slide if I we a way $XXX use to $XX there guidance XX as would our add savings think, cost to about – you that adjusted you EBITDA the the proxy outlined on and to Yes, additional EBITDA on the million that think it of fourth

Marc Bianchi

much. I’ll it thanks back. Great, turn Okay. so

Operator

Advisors. line the question next Heikkinen Smith with David of comes from Your

David Smith

Thank conference you us for you. Hi, call. also say morning. And good thank in to want the

QX in the of about you I as to with, of ask that fits I primarily I question received revenue? check of that Asia-Pac to wanted midpoint know relates XX% of prior orders? revenue if of to were called strength sales. the orders the strength quarter also ahead But guidance. out included First the product that QX booked your if wanted

Jeff Bird

quarters. of largely from were we the bit prior any quarter, given revenue bill book that in little in Jeff. the realized and the but quarter, is This There’s a bookings

to revenue. you’re to QX of bookings a see the turning going So lot

David Smith

was about written Appreciate looks question, like of off $XX it. follow-up in QX And it million or the inventory about QX. XX%

can potential around correct. to in particular future? there’s if if I give a color line? write-off? you Just And that If any any the though as curious us some And inventory the to make product that it’s wanted recoup from value got sure,

Jeff Bird

$XX – went number right so back holistically was did million is believe well. What as is that I the and percent this Yes, we on is just Jeff, right again. The we our we’ve down of And we our accordingly. and to it reasonable believe would at on market marked looked what be light new the adjusted inventory outlook in resale value. and a

So as EBITDA wouldn’t flow on there it. be cash be there that probably much incremental free from would as

David Smith

Great, thank you very much.

Operator

question Pickering. George next Your from with O'Leary Tudor, comes

George O'Leary

morning, Good Good morning, Blake. Jeff.

stepping going and thinking globe. Just from forward back about the around potential for FIDs the incremental

Just given that these are longer-term projects.

look might next geomarket over surprises XX If it the And geomarkets just where some the call are perspective regional cross softer or globally view, we spots most period positive it which longer-term are a years? potentially a you two-ish some time from and see excited months to call about? to take over regions next that you

Blake DeBerry

Sure.

older map of look and is globe good couple XX in to operators to of us well lot it’s work, Mexico Aramco seeing as So as East, a some downhole on. Gulf And see we’re can up actually some pick the what and of kick of at up the the in with of also with tieback that’s heat North Page for Mexico it there as next the we, the type look of up really chasing region, equipment predominantly, Pacific to and But a down we’re is is into up some if But some deck And is Also, look looks lot well with projects attractive. of, you work Middle are looks activity of at products then in our seeing our see kind year really the off going and tool there. in well to what in in North years where our Asia cap be to the Brownfield follow in Sea Sea this in projects to and a we’re we Middle there. particularly – see that we out, investor East Aramco. the put we’re the attractive going inroads first you put making we over going mudline China, Mexico.

bit there. there further benefit the have LNG Australia There’s going plants infield to to little many to of got out, feeding can that a road going see LNG They we’re as activity up. picks couple I we down from keep now. from that’s be years so think a think They’ve over but those work pickup we plants. the

George O'Leary

that’s color. then next cuts done an and cost Great, guys you side. job you just, have far And helpful appreciate it. cost is super on I cut question about XXXX-plus so as the executing think impressive

XX characterize XXXX-plus the much cost from $XX like on You to Or supply Is $XX it would shift saw into away how in you savings XXXX-plus vertically seems sourcing numbers. too that integrating adding But had third QX initiatives? maybe procurement you suggest and and commentary some reading things beyond certainly forgings from parties? a above that? I integrated the Slide around to chain, Am and realignment million. million

Blake DeBerry

That’s time forge Which there. to to right? Yes, a that’s outright a from it last our our that those get terms really show up on cost in the JV the looking activities inventory alternatives reason kind use all sale on supply supplier, at the of – just if a options facility – coming XXXX the to at our play strategic in I We’ve I chain an that looking and we’re the got the us the on facility of to spend products better think of those year. more mothballing, chain, sell of option. so are little supply leasing although timeframe to is it down. much But will in outcomes that’s through forgings looking costs is when you initiate and passing a you’re it’s to pretty at we’re lower we broader the getting this track. why Obviously, that’s say of fence. want on as making for those I in believe forging XXXX before cost the it we bit can sales.

Jeff Bird

a initiatives. really commentary of in for savings about $X RFP that on in I I million from around of forge our cost have annually. last result XXXX cost we we’ll mean, initiatives $XXX that have mentioned the in Slide the or don’t anything by forge forge. the piece probably year the the savings from building second Just XX be think, in cost-saving on We annual talk We initiatives $X the ultimate an base a our to cost million chain, of out end million would of disposition supply standpoint. the as where our

But are right as XXXX. won’t read really through we just bit So that till a added turns those Blake says, little and on working now. slower the

George O'Leary

thanks. Great, Okay.

Operator

[Operator Instructions] Martin with from Rice. next question the Johnson Malloy Your line comes of

Martin Malloy

Good the and thank key drivers talk about you segment. will of maybe for the there? from continue you terms growth absolute I XXXX ask into Could having wanted It of growing XXXX. in to And looks call. dollars whether services like morning, think you that it’s XXXX? about to this some

Blake DeBerry

Sure.

we buy consistent go but Wellheads, the go we’ve Subsea buy period me revenue year of that discussed Wellhead when historically those. in business that’s two high what They excuse So to inventory customers a property growth as back – in our as products held seen anymore our have Subsea services don’t is with before they the the work. I customer particularly with

towards our service So of activity more that our revenues level. the then a result But joints. increase mix as of shifts products fabricated

come that normalize. higher the a for margins is of service in the percentage will de-stocking revenue percentage the wellhead of the time. reordering you’ll or going gross see come revenues Once total of then down. are margins the that a so And total a And period and complete service being then products shift revenues as to of of

Martin Malloy

Okay, focused on tuck-in potential And Can you M&A, your you technology about in for for offshore speak regarding mentioned thank what onshore acquisitions. you. you’ve slides then for? Are some those the looking or maybe you’re acquisitions?

Blake DeBerry

differentiated the as really that technically acquisitions chain XXXX, along. lane, was commodity we’re to Sure, to is the things it’s we looked its is we play. that’s and that we’ve stay Look, it supply thing good The part where us second for go clear products we when the what reality all in onshore, of do. strategic not perfectly And we’re one of is a sure. was of And swim in and of quarter at at. that at more right review which did good been what

good what we’re to we’re stay going So at at.

really acquisitions quicker. of can are help advance that our efforts us those talking we’re that R&D the technology pieces about So

So it’s with going tie to accomplish be smaller closely program. we’re tuck-ins our with that R&D trying what to

Martin Malloy

Great, you. thank

Operator

comes question David next Heikkinen of with from Your Advisors. the Smith line

David Smith

me back Thanks in. for, let

up inventory the I sure converting services to is think wellheads orders to you that to I shows their segment? BigBore-IIe. assume one and make customer fair it in mentioned wanted And

Blake DeBerry

No, that products in show up segment. will the

there is a cost of So conversion.

wants somebody up So – it, a to convert if it shows as just product.

David Smith

customer was and you for curious, of inventory your how in maybe see additional conversions And orders the opportunity also backlog?

Blake DeBerry

I that in backlog. don’t any know we’ll see

individual customers it’s dependent I And the the and in drilling on really their are think preference where they the offshore arena. wells.

they’re is current Brownfield doing the very complete things customer to One moved the environment challenging shallower easy tieback, has more seeing deepwater, and base in wells, of that deep away wells stuff. we’re the the drilled our from more

the arena. not they back while big that providing as as move into deepwater is the advantages So some when BigBore-IIe advantages,

So a new when I’ll my when have get And I more inventory complicated then. think these over wells, things the right to lot I having back I – into our are switch now. product of to customers consume that

David Smith

Appreciate the caller, thank you.

Operator

Simon question comes Wong from Company. remaining Gabelli last with & your And

Simon Wong

couple A gentlemen. questions. for cash cost What of in morning, restructuring XXXX? Good

Blake DeBerry

that? Jeff, take you want to

Jeff Bird

should of around we XXXX, $X the cost comments Yes. believe charge No, I there million, say will took while for opening cash the in in there in shouldn’t – million. but $X that any of our was outlined I full be XXXX for cash XXXX cash end so charge at restructuring be the more

Simon Wong

taken XXXX. was in that Okay,

Jeff Bird

was the charge cash taken the in would out XXXX. go XXXX, in Yes,

Simon Wong

through follow-up. my Or think in more share the you are then And you the stock be new stock buying Okay. the be the Can talk year? repurchase now authorization? you gradual planning You’re is aggressive? last to down, authorization how and even will repurchase about year, $XX your about

Jeff Bird

we believe believe that stock today. cost so – execute that repurchasing. is board the on We the that a Yes, We value initiatives our are good that will approved outlined. stock

be look fair looking of next nine value to market our over we’ll at at the stock. So months the the

Simon Wong

thank you. Great, Okay.

Blake DeBerry

along. you. conference concludes Thank everybody I call. following That in. to for thank want right. Dril-Quip’s appreciate All And inaugural you we listening

Operator

This today’s concludes conference call.

now may You disconnect.